Content Marketing Blog

Facebook and Yahoo do battle over patents

Facebook and Yahoo have joined the ranks of technology giants currently undertaking legal action regarding patent infringement.

In the first major court battle among big technology companies in social media, Yahoo filed a lawsuit against Facebook with California's federal court on March 12, claiming that ten patents covering advertising, privacy controls and social networking had been affected.

Among Yahoo's claims is that Facebook and other websites would not enjoy "repeat visitors or substantial advertising revenue" without its innovations.

Yahoo also believes that its patents cover basic social networking ideas such as customising users' experiences and generating advertisements specific to the individual.

Most surprisingly, Yahoo has stated that Facebook was considered "one of the worst performing sites for advertising" prior to adapting Yahoo’s ideas.

Facebook has hit back at the claim, stating that it will defend itself vigorously against the "puzzling actions."

"We're disappointed that Yahoo, a longtime business partner of Facebook and a company that has substantially benefited from its association with Facebook, has decided to resort to litigation," Facebook spokesman Jonathan Thaw said (March 13).

Facebook had just 56 US patents to its name at the end of 2011, while Yahoo owns more than 1,000.

The legal action also leaves Facebook in a vulnerable position, as any negative news may impact on its impending initial public offering (IPO), which is expected to occur in May.

"This [lawsuit] will put a cloud over [Facebook's IPO], putting extra pressure on Facebook to settle," said Rob Enderle, analyst with the Enderle Group, told Computerworld yesterday (March 13).

"Basically, Yahoo is using the IPO as a lever to force [Facebook] to settle when they otherwise wouldn't … That is why Yahoo is doing this now."

The social media giant will be looking to raise anywhere between $5 and $10 billion when it enters the stock market.

Posted by Elise Ferrari